Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
The market price of Bitcoin and other cryptocurrencies is plummeting, having dropped by 10 per cent just today, and 50 per cent over the past month. The bubble that reached maximum expansion a year ago is gradually deflating.
The good news is that a lower Bitcoin price makes the energy-wasting process of Bitcoin mining unprofitable for many, so lots of miners are turning off their servers. Most estimates of the marginal cost of mining are around $4500 per coin, but the market price has just fallen to $3500.
That situation won’t last long. Every couple of weeks (more precisely, every 2016 blocks) Bitcoin adjusts the difficulty of the pointless algorithm used to mine coins, so as to ensure a steady flow of around one every 10 minutes. As mining effort has declined, the difficulty is reduced, which means less electricity wasted per Bitcoin.[1]
The rapidity with which Bitcoin prices are falling give some hope that the entire disastrous episode will soon be over. If the current rate of decline (50 per cent per month) is maintained, Bitcoins will be worth less than dollar coins in a year’s time, and their impact on electricity demand will be negligible. That’s equivalent to taking a small country like New Zealand off-grid.
In this context, it doesn’t matter whether Bitcoin miners are using renewable energy or coal. The opportunity cost of the electricity they use is the coal-fired electricity that would otherwise be displaced by renewables.
fn1. As shown here, mining difficulty leveled out in September and started declining in November. Since electricity consumption depends on both mining difficulty and the speed of the machines being used, which is increasing over time, the energy wasted on Bitcoin probably started declining modestly as soon as mining difficulty leveled out.
This story about the four-hour abalone fishing season in WA is reminiscent of a number of similar cases discussed in my soon-to-be-published book, Economics in Two Lessons (extract over the fold). However, it turns out to be something of a special case: a recreational fishery where economising on effort isn’t really relevant, and where the activity is culturally significant, mainly for people of Asian background. In these circumstances, a short season, with open access, makes good sense.
Carbon dioxide emissions rose strongly last year after several years of a near plateau. It appears that the main factor was increased use of oil, mainly as motor fuel. I’ll try to do a more detailed analysis later, but the central element of the required response is obvious. Just like coal-fired power stations, petrol-driven motor cars need to be phased out, as quickly as possible. Australia, as an oil importer with no domestic car production is in a position to pursue this target aggressively. We should, as others have done, commit to a date, say 2030, after which all new cars sold would be zero emission.
A week ago, I was speaking at a Royal Society of NSW Forum on the topic “Getting climate policy back on track” when the news came through that Adani had announced a start to the Carmichael mine “before Christmas”, funded from the company’s own reserves. With Christmas now less than three weeks away, where do things stand?
It’s evident that, as with previous construction starts, this one won’t be on a large scale. Adani has just posted its first job opening for a year, on the portal it set up with great fanfare in mid-2017. It’s for a Senior Mine Planning Engineer a “newly changed and developed role reporting to the Head Mine Operations”. Given that Adani has announced a proposal that’s radically different from the one they were running last year, you might have expected that a Senior Mine Planning Engineer would have been on the job for some time, heading a substantial team. Still, it’s likely that some kind of activity will take place, even if it’s only symbolic.
The big question is how Labor will respond, since it’s highly likely to be in office by the time any serious mining activity starts. So far the signs have been mixed. Queensland Premier Palaszczuk has said, correctly, that this is effectively a new proposal, and will need new approvals. On the other hand, Penny Wong has suggested that, once contracts are signed, the dreaded spectre of “sovereign risk” will mean that the government cannot intervene. This is a bogus argument in the specific case of Adani, but the whole idea needs to be challenged. Governments routinely break their promises to voters, and corporations regularly renege on their commitments to governments, but, in the era of neoliberalism, promises made by governments to corporation have come to be held sacred.
Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.
The long-running Brexit fiasco has overshadowed most news coming out of the United Kingdom these days. It’s not surprising, therefore, that hardly any attention was paid to news that may be of more long-term economic significance to Australia, and to the current crisis of neoliberalism, than a rearrangement of relations between the UK and the European Union.
In the Budget brought down in late October, UK Chancellor of the Exchequer, Phillip Hammond announced the end of the Public Finance Initiative (PFI). The PFI was introduced by the Conservative government of John Major in 1992, and greatly expanded under Tony Blair’s New Labour government. The PFI provides a financial framework for Public-Private Partnerships, which have their own acronym, PPPs.
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Adani Mining announced today that its scaled-down Carmichael mine project would proceed without any external funding. Before considering reactions, it’s important to recall causes for scepticism.
First, Adani has repeatedly announced the imminent start of the project, while doing little or nothing. It is possible that this announcement will be followed by months, or even years, of “pre-construction activity” during which the project is kept alive with minimal expenditure from Adani.
Second, the economics of the project are as bad as they have ever been. Thermal coal prices have declined in recent months, especially following China’s decision to freeze imports. If China gets through the winter without significant problems, it is likely that the decline will be permanent. Even if it isn’t, the discount on low-quality coal =of the kind found in the Galilee Basin is rising all the time.
Third, the failure to secure any external finance for the project is significant. Most of the big lenders have now sworn off thermal coal altogether, but if there were real money to be made here, some second-tier institution would probably have gone for it.
So, it would make sense to wait for a while to see what develops. Still, we need to be prepared for a decision on whether Australia is going to back a future for coal, and destruction for the global environment or a moratorium on new mines. Labor under Bill Shorten has been surprisingly brave on issues like tax, and our Trumpist government is in a complete mess. A strong stand would be a huge step towards a better future.
Anthony Albanese has a piece in the #Ozfail (not linked) restating standard [1] claims that political life is increasingly characterized by echo chambers and that we ought to make more of an effort to engage with those whose views differ from ours.
He mentions, as example of the dire consequences of not doing this, some international examples
this polarisation in global politics has seen the demise of many of the historically successful progressive political parties such as France’s Socialist Party, PASOK in Greece, the Partito Democratico in Italy, the Social Democrats in Germany and many other affiliates of the Socialist International.
In many countries, parties of the radical Right have emerged with disillusioned working-class people as their social base.
What’s striking about this list is that most of the examples lost votes at least as much to parties on their left, which rejected their complicity in austerity: Syriza in Greece, Melenchon’s la France Insoumise, and the Greens in Germany and the Netherlands. Yet there’s no hint in Albanese’s article that the centre-left needs to be open to the views of such groups and their supporters: apparently, we need to be talking to the supporters of Golden Dawn, Le Pen, AfD and so on.
Albanese’s position in Australian politics is exactly the same. He’s happy to talk to Andrew Bolt and the Oz in the interests of an open debate, but as far as I know he has never had a good word to say about the Greens, let along sought to open a dialogue with them. Apparently some alternative views are more equal than others.
The circus that is the Liberal National Party was pushed down the Queensland TV news today by bushfires, caused in turn by an unprecedented heat wave. There’s little doubt that the severity of the heat wave is the result of global warming, and that it’s part of a broader pattern. The two events are, of course, linked. The chaos in the LNP reflects the determination of the climate deniers in its ranks to reject any action to reduce greenhouse emissions.
None of these people are acting in good faith, or on the basis of a sceptical assessment of evidence. Without exception, their rejection of climate science and the policies it implies is based on a combination of vested interests zndpursuit of a culture war against “greenies”, “virtue signallers” and anyone who wants to do anything to save the planet. There is literally no evidence that can move them from their position, and they would rather see the planet destroyed than admit their errors.
There’s plenty of blame to go around here, but today I’ll call out Ken O’Dowd, the federal member for Flynn, where the worst fires are burning. Flynn is an advocate of withdrawal from the Paris agreement. He’d rather see his electorate burn than admit that climate change is a reality and that we need action now.
John Quiggin 